To avoid risks, simply don’t do something. That’s clearly the easiest way to avoid risks, right? It makes sense, but in avoiding the risks, you may also be avoiding making the best decisions for your life.
Becoming a real estate business owner obviously entails more risks than not being a business owner, but risk equals reward – it’s as simple as that.
In the world of finance, higher interest rates are paid to investors when funds are employed in higher-risk ventures, and vice versa. So it is in the world of business – play it absolutely safe and you can expect proportional results. This does not mean you need to shoot for the top reward in all situations and be reckless in your risk-taking. It’s about balanced decisions based on understanding the risks and being prepared to accept the possible outcomes.
Fear is probably the biggest impediment to progress. What I mean by this is that agents often feel so much fear about stepping up to business ownership that it stops them from proceeding. An acronym I like for FEAR is False Evidence Appearing Real. So if you feel fearful of opening your own enterprise (and practically all agents are) then it may be productive to identify what the specific items are that make you feel that way.
Fear can be a paralysing emotion, and generally has a negative effect if not faced. However, for the most part, if we look back at what we were once fearful of, we find that we’ve moved beyond that fear and it no longer applies. This is typically what will happen if you plan to open a business. Feel the fear and then do it anyway – the fearful perception is always greater than the actual situation.
Let’s talk about specifics: so you’d love to have your own business, but you are afraid. The very first thing you should know is that you are completely normal. Whenever we step into unfamiliar territory fear arises. However, we can break it down into understandable chunks and take a look at what we may be feeling concerned about.
Q. Are you the first person to have opened a business?
A. Well, of course not, so that means it can be done.
Q. Are you unsure of what to do?
A. Yes, naturally, because you’ve not done some aspects before (although many you will have). However, there has never been a time when information was more abundant and accessible than it is now, and whatever assistance you need is out there.
Q. What if I run out of money?
A. This is what accountants, bookkeepers and financial advisers are for. You need a solid business plan that contains a reliable assessment of what your business costs will be for at least the first six months, as income takes time. Be careful to keep these costs as low as possible and then, on the other side of the ledger, estimate income very conservatively. Considering that in your own business you’ll be keeping 100 per cent of your fees, and if you follow my lead and keep your operating costs as low as possible, then you may be surprised how few deals it will take to get you profitable and keep you there. Use this free spreadsheet to work out the costs involved.
Q. What’s the worst thing that could happen to me?
A. Presuming you are a good agent who can list and sell – and it would be unwise to proceed on any other basis – then in the highly unlikely event that you either don’t list and sell property or don’t like being your own boss, your previous employer (or a competitor) would no doubt welcome you back with open arms. So your worst-case scenario is that you go back to where you were before.
Most large franchise groups you may consider joining are usually keen to have you spend large sums setting up and operating a business, but I do not feel this is at all appropriate. Bigger is not necessarily better, so keep it lean and mean. This way when you secure a fee you get to keep most of it instead of witnessing your hard-earned money dwindle away on unnecessarily high operating costs.
The truth is that if you are established and have ability you are far more likely to succeed than fail. With all the information that is out there to assist you, there has never been an easier time to make the step. At the same time you will provide some security for yourself, improve your self-esteem, increase your income and have the enormous pleasure of self-achievement and running your own race.
Paul is the founder and CEO of One Agency.
He offers real estate professionals an opportunity to reap the financial rewards of going it alone, with the security (and clout) of an established brand.